Chart Industries Stock: A Small Cap with Big Rebound Potential

Small Cap Rebound

As Dow stocks plod along, smaller tech companies on the Nasdaq are where the real profit opportunities lie. Chart Industries stock is a prime example.

In the wake of the 2020 stock market correction, the Dow Jones Industrial Average has been lumbering along with a slow recovery. While most investors stared at the evening news this year, watching the rebounds in Procter & Gamble (PG), Home Depot (HD) and other Dow 30 stocks, they failed to notice the more profitable action taking place in the market’s fast lane, the Nasdaq Composite. That’s where smaller, higher-upside plays like Chart Industries stock reside.

The Nasdaq fell far less than the Dow Jones industrial Average during the March downturn, and has recovered more quickly. As of May 26, the Dow is still down 15.4% from its February high, while the Nasdaq is down just 4.9%. What’s more, the Nasdaq is still rapidly rising! Let’s make sure you’re positioned to profit from the capital gains offered by these small and nimble companies.

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Why Chart Industries

Chart Industries (GTLS) is a leading independent global manufacturer of highly engineered equipment serving multiple market applications in energy and industrial gas. The company is actively growing its global presence and revenue with operations in the U.S., Europe, Asia, Australia and Latin America. Chart Industries is focused on business expansion and efficiency, people and safety, cutting wasteful costs and making acquisitions that enhance current operations. Chart has no direct peers, offering turnkey solutions with a much more broad set of product offerings than other industry participants.

More recently, Chart delivered strong first-quarter results in April. While other companies were racking up earnings misses, and even stunning losses, Chart delivered $0.57 earnings per share (EPS) when the analysts’ consensus estimate was $0.51. That’s a big upside earnings surprise, especially during a dismal earnings season that found many companies wringing their hands, explaining to investors that they’d be taking on more debt in order to survive the business downturn.

In contrast, management at Chart declared, “Debt paydown is our priority for utilization of the cash we generate. Year-to-date, we have taken cost reductions totaling $48.8 million of annualized savings. This is in addition to the $38 million of savings from cost reductions taken in 2019.”

As is typical of successful small companies, Chart’s revenue and profits have been growing aggressively. Revenue has risen from $859 million in 2016 to Wall Street’s projection of $1.4 billion in 2021. During that same time period, EPS has nearly tripled, from $1.17 to a projected $3.23 in 2021, despite the difficult business environment caused by pandemic-related lockdowns.

Chart Industries is thriving in the global business arena because it’s exactly the kind of company that bigger companies love to acquire: a company with consistently rising revenue and profits, and a global presence that can provide an ease of entry for a bigger, acquiring company into foreign markets. The price tag would certainly be low, as well.

Alphabet (GOOGL) is another growing, global company, but they’re never going to receive a takeover offer because they’re too big and expensive. However, many small, medium and large corporations could afford to finance the acquisition of Chart Industries, because it’s a small-cap stock. The company has a tiny $1.5 billion market capitalization. Chart also has significant institutional ownership. That’s important because Wall Street is telling investors that Chart is a company that they expect to make money on.

Chart Industries Stock on the Rebound

If Wall Street sees the value in Chart, you can bet that Chart’s competitors and bigger industry players are well aware that Chart Industries is a valuable asset to potentially own, whether the admirers are buying shares of GTLS stock or the entire company.

GTLS had a recent peak in February 2020 at about 75, prior to the market downturn. Then it cratered, nose-diving to 16 during the coronavirus crash. But the stock’s been climbing since its mid-March low, now all the way back up to 41. There’s still 82% upside as Chart Industries stock heads back to its February high!

Chart Industries stock has more than doubled in the last two months.So if you’re looking for a big capital gain opportunity, look past large companies like Netflix (NFLX) that are getting all of the media attention, and seek the gems that make up the small company component of the Nasdaq. To capitalize on the ongoing stock market rebound, my money’s on Chart Industries!

Timothy Lutts

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